Sunday, January 23, 2011

I will be out of town from 24th January, and returning on 28th January. During this interval, I will not be accessing or responding to any emails, telephone messages or posting any material to blogs or social media. I look forward to being in touch with you soon after my return.

Greetings and compliments. As usual, the customary disclaimer applies. If you do not read it and understand it, you are not authorized to read any of the content which follows it. If you cannot read it or understand it, you probably should be reading a different article, on a different blog, by a different author...perhaps you should just be watching television or playing with a Slinky. These are not generally considered to be dangerous activities (unless you are taking medication, have a health condition limitation, or you are doing the Slinky thing on or near steps or a stairwell). Having said this, if you concur, please read on [I will wait].

Note: The information contained herein is not and should therefore not be considered or construed as financial, investment, tax, accounting, legal or health advice under any circumstances. If you are seeking professional advice regarding any of your business or personal affairs, please consult with the appropriate professional. Neither the author, nor The Global Futurist, nor The Internationalist Page are in the business of offering any professional advice, and none of the foregoing parties shall assume any liability, either express or implied, regarding any actions taken, or not taken, by any third party or parties as a result of, or in any manner, relating to the information contained herein. The reader of this article understands and acknowledges that he or she has read and fully understands the foregoing, and indemnifies and holds harmless each and all of the aforementioned parties with respect to any liability whatsoever resulting from any actions taken or decisions made based upon, or in relation to, any of the information contained herein.

NEAR-TERM TRENDS, FORECASTS AND PROJECTIONS AT 01.21.2011

1. The price of oil (per barrel) will rise to between $120 and $150 US Dollars per barrel, and both oil and gasoline prices at the pump in both the US and Europe will reflect this. The timeframe will be between now and June, 2011. Prices per gallon of gasoline in the US will rise to approximately $5.00 US per gallon at the pump. All transportation-related industries, and all transportation-dependent commodities will rise in price in response. This will slow the alleged economic recovery and dampen employment prospects in the United States and in Europe.

2. The US mainstream media will begin focusing on tensions and troubles in North Korea and Iran, while the US military and contractors dependent therupon will be lobbying for increased defense spending. As China becomes a world leader and flexes more and more of its fiscal and military muscle, this lobbying will increase in intensity, and effectiveness. The timeframe for this will be between now and 2012. An increased defense allocation and related spending will ultimately result. Privately-owned and publicly-traded military, engineering and other "contractors" will continue to thrive, as military actions and "nationbuilding" activities become increasingly privatized.

3. International investments in certain of Asia's ETFs (Exchange-Traded Funds) will increase, particularly in Singapore and Malaysia. These ETFs will outperform most other exchange-traded non-commodity investments. Major oil company stocks will outperform the general securities markets during most of this time [now to 2012].

4. There will be an increased percentage of consumer purchasing activity taking place over the internet internationally, as travel becomes less practical and more expensive. This will benefit the operators or e-commerce businesses. [now to 2012]

5. There will be increased civilian arms sales within the United States - this has already begun in response to fears of domestic violence and a deepening security crisis in neighboring Mexico, which will become increasingly controlled by major drug lords and international drug cartels, to the extent that the Mexican government will be merely a vestige of authority. [now to 2012]

6. There will be a further exodus of jobs, talent, opportunities and well-educated individuals (recent college graduates and displaced Baby Boomers) from the United States to Asia, Canada, Western Europe and to parts of Central and South America. [now, and for another five years at minimum]

7. The economies of China, emerging nations in Southeast Asia, India and Brazil will outperform virtually all of the others. [now, and for the next three years at minimum]

8. For reasons unknown to the author, catastrophic weather events, and rapid environmental and ecological changes will continue to be more the norm than a mere aberration. Global Warming? Ecological Abuse? Revelations? I offer no cause -- only an effect. The business of catastrophic event-related insurance and political risk insurance will rise to greater public prominence and thrive in profitability. [now, and continuing for an uncertain period of time]

9. Cloud computing will rise to a greater acceptance level, and mobile devices will be the predominant means of communication. Texting will all but replace email, and a few major "software as service" cloud providers will emerge to dominate the communications landscape. Mobile applications and mobile-friendly communications will supplant most software-stuffed computers, and their use. Communications security will be a concern, but will not significantly slow the adaptation of cloud configurations and dependencies.

10. Stuxnet, the sophisticated virus which confounded Iran's efforts to become a nuclear power (i.e., to build nuclear reactors for peacetime energy production), is just one of many government-sponsored or organization-sponsored cyberterrorist weapons or threats to be developed and used during the next few years. The interrelationships among universities, governments and giant computer service providers will make this impossible to safeguard against. Science fiction? No. Reality.

11. The business of reputation management on the internet (i.e., protecting an individual's or company's image or reputation on the internet from being sullied by citizen journalists, vindictive [and occasionally unfounded] but indelible complaints and allegations which do not disappear from search engine findings and data-mining research) will rise to prominence and grow. Large enterprises will use the technologies of reputation management entites offensively as well as defensively in battles over marketshare and the the court of public opinion. I believe that this industry will be booming during the course of these next two years, commencing with Spring of 2011. The ingrained philosophies and ethics of negative campaigning virtually assure the success of these reputation management forms -- competitive campaigning will feed these companies to robust growth.

I believe that's all that I have for now. I look forward to updating you.

As someone's uncle once said, "Hope for the best, but prepare for the worst." Where there are new problems, there are also new opportunities for those who can see them and seize upon them rapidly.

During the course of these past three years, the entire world has seen and experienced an economic tsunami, a crisis of trust and faith in the most venerable institutions, and a growing divide between those few powerful persons in positions of authority and those many persons who constitute the masses.

The masses have universally become disenfranchised and distrustful of those in positions of authority and power. The members of the suffering masses are feeling either helpless or restless -- but few are trustful or happy with the status quo.

There is a new tie that binds all of those citizens of The Internationalist Community, The Global Village and the Human species -- we are all sharing a crisis of confidence, and a lack of qualified, trustworthy leaders with vision and true integrity.

There is a high probability that some of those currently in power, those currently insulated and ensconsed within the protective palaces which they have built by the sweat, toil and suffering of the barely-subsisting majority will be displaced within these next one to three years.

New leaders will no longer be able to depend upon sovereignty, patriotism, empty rhetoric and hate-mongering to unite the masses behind them and to keep their power. The Internet, the entropic economy and the mysterious changes in the dynamics of the weather have made those safeguards of bygone times a virtual (pun intended) impossibility.

New leaders, in addition to technological mastery and expert advice, will be required to exhibit qualities which the older, dying "guardians by divine right" have never had to bring to the fore.

New Leadership will have to demonstrate a genuine alignment with the populations for whom they are responsible, as well as those same populations to whom they will now have to be accountable. New leaders will have to serve their followers instead of merely stealing votes and money from them based upon half-truths and blind faith.

There will still be a use for weaponry and shows of military strength -- but these will now have to be tempered with a heartfelt passion for their followers, as well as for the causes, organizations and nations which these leaders will lead. There will be a need for empathy, as well as a desire to dominate and control.

New leaders will be tasked with not only leading, but with caring for their constitutents, adherents and followers. The metaphorical muscle of the heart, long neglected but often abused, will have to be strong in these leaders. In sum:

"The Greatest Leaders Must Have As Deep A Love For Their Followers As They Do For Their Sacred Ideals And Objectives." -- Douglas Castle

My borrowed time here has led me to believe that Love can be a strength as well as a weakness. Do not underestimate its power and role in enlightened leadership. -- DC

Wednesday, January 5, 2011

Note: This is a re-publication of an article originally titled "CROWDFUNDING - Entrepreneurial And Small Business Growth Capital Made Accessible," first published in December of 2010. It is going to become increasingly popular as conventional approaches to financing continue to become increasingly complex, highly-regulated, and inaccessible to the productive Entrepreneurial Sector, where money can be deployed most efficiently to re-build a solid, sustainable economy -- one in which a Middle Class can thrive, employment proliferate, productivity reign, and innovation triumph over a status quo which benefits so few and destroys so many. Genuine productivity and incentives to promote the same are needed where governments and big businesses are so heavily invested in sustaining the status quo of greed and deception at the possible expensive of an entir nations and a still-promising species. -- Douglas Castle, January 5, 2011.

Q: Could this herald the beginning of a revolution in the traditional capital markets? Is this new idea going to create a needed redistribution of significant operating and growth capital and liquidity into the Emerging Enterprise and Small Business Sectors? What might be the potential impact on the domestic and global economies, employment and the future distribution of wealth?

Note: 12.19.2010 - The article which follows was written by Douglas Castle for simultaneous publication in THE NATIONAL NETWORKER WEEKLY NEWSLETTER/ TNNWC WEEKLY NEWSLETTER™ and THE GLOBAL FUTURIST™ Blog. It may be reproduced, transmitted or republished without permission provided that 1) the article is printed in its entirety without edit or deletion; 2) all hyperlinks are left live and intact; and 3) attribution is given to both the author and both of the aforementioned publications by name. This article does not contain, and should not be regarded or construed as investment, tax, accounting, financial or legal advice under any circumstances. No sale or solicitation for the purchase of any type of securities or other financial invests is made hereby.

Further Information:

THE NATIONAL NETWORKER WEEKLY NEWSLETTER™ and other TNNWC™ publications –

Preface: Here is a basic definition of Crowdfunding from Wikipedia, the free encyclopedia:

“Crowd funding (sometimes called crowd financing or crowd sourced capital) describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations. Crowdfunding occurs for any variety of purposes, from disaster relief to citizen journalism to artists seeking support from fans, to political campaigns, to funding a startup company or small business.”

This article was inspired through a letter which I received from Ashok Margam, a Linked In colleague and co-member in a group about crowdsourcing. Thank you, Ashok, for energizing me. Ashok’s letter to me is reproduced below:

Welcome to the Group! TNNWC Group's mission looks pretty interesting and closer to the interests/alignments of the group! Hope together we can help some startups in the region.

What do you think of the current petition with SEC about the exemption for "crowdfunding" kind of capital raise - up to a certain limit, without the Blue Sky laws etc.?

Don't you think the regulatory picture might slowly evolve to accommodate the growing interest in the CrowdFunding?

Just curious about what you and other members think. By the way, I created a poll for this, about when you think, if any, CrowdFunding would change the way startups raise capital. Could you care to answer that poll and, may be forward to other contacts? It should be interesting for us all to measure objectively the perceptions of the society around - eventually, those pave the way for how regulation evolves.

Thanks!
Ashok Posted by Ashok Margam------------------

Crowdfunding is a rapidly-emerging phenomenon based upon the leveraging of the Internet and social media to solicit funds for projects, causes and for smaller companies (or start-up enterprises). It is a logical and innovative entrepreneurial response to the growing problem of obtaining relatively small amounts of financing for private enterprises. The principle is similar to that which is employed by not-for-profit, cause-based organizations which raise small contributions from a relatively large donor audience via their mass e-mailings, newsletter and their presence on the web.

At present, most crowdfunding efforts yield relatively small sums of capital (i.e., anywhere from US$5,000.00 to US$1,000,000.00) in very small increments (i.e., anywhere from US$100.00 to US$5,000.00) from any number of investors or patrons. It is, if properly planned and implemented, a means for an ambitious company to raise a small early-stage round of financing without having to: 1) approach and engage in an elaborate and often time-consuming courtship (sales cycle) with angel investors, venture capitalists, investment bankers, government agencies or commercial banks; 2) spend large sums of money -- principally legal fees, compliance fees and production costs) on preparing Private Placement Memoranda (for private offerings to a limited number of specially qualified, “accredited” investors) or Sales Prospectuses (for initial public offerings); or 3) sacrifice a tremendous share of the company’s ownership and control to outside parties at an early, vulnerable stage in the company’s life cycle.

Most participating investors in crowdfunding efforts are non-wealthy, non-institutional individuals who simply believe in the management, objectives or intentions of the offering entity. Many of them are, in fact, entrepreneurial individuals who would like to participate in other entrepreneurial companies for either altruistic reasons, or to obtain a direct return on investment from a private company, assuming that the company is successful.

It is a very straightforward approach which allows adventurous private sector investors or participants an opportunity to directly participate in the bootstrapping and profitability of potentially successful ventures. There are virtually no price barriers to entry (small sums are invested per participant), catastrophic risks (while there are risks inherent in every investment, if the amount being invested is less than the cost of dinner and a show, a loss of the entire investment would probably not have significant adverse consequences to the investor.

The mechanism is incredibly simple. An entrepreneur, executive or spokesperson of an emerging enterprise or growing business makes an offer (generally in the form of a brief request or polite solicitation followed by some additional information to those parties who indicate that they may be interested in participating) to the public through postings on various social media groups, opt-in subscriber lists, business networks, blogs, websites and other internet-based communications forums to raise money for some specified purpose. If the purpose is to raise funds specifically for investment in the issuing entity, and if the investor is not involved in the management or affairs of the company, one potential complication might be the need for compliance with federal regulations and state laws governing offerings of securities. If you are, in fact, making an offering of securities, you must make the necessary regulatory and state (“Blue Sky”) filings.

While I have heard numerous offline discussions about the SEC and other similar regulatory agencies in other countries regarding the possibility of creating a separate, less cumbersome status for crowdfunding offerings, and about numerous petitions to three of these agencies toward that noble effort, I remain highly skeptical that any significant change in the securities laws governing crowdfunding will come soon. Both the regulatory agencies and the expert securities lawyers have too much financially and politically at stake to create an exemption or exception for any “special” class of securities offering – especially one which I believe is going to increase tremendously in popularity within the next 24 months to the extent that it could become a capital markets game-changer.

It has long been the position of securities regulators that their primary role was to keep “order” in the capital markets (note: to some cynical folks that merely means keeping Wall Street investing as close as possible to casino gambling for the large numbers of small, independent investors, while simultaneously keeping the select, elite “too big to fail” powerhouses effectively in charge of the game, as the “house’s favored insiders”… but I digress…), and to protect investors from abuse and fraud – like the occasional Enron, Madoff or market collapse which vaporized many a pension and retirement fund.

For the time being, it would seem prudent to avoid using any method of crowdfunding that could be construed as a securities offering. The mere compliance and filing fees involved would make a small capital raise far too expensive for serious consideration. You should consult competent legal counsel to find out A) if you are making a securities offering, and B) what your most viable alternatives to this might be.

One way to determine whether or not you are making an offer of securities and may be subject to the applicable regulations and laws, at least in the United States is by the Howey Test.

The Howey Test says that a transaction constitutes an investment contract (therefore a security) if there is (1) an exchange of money (2) with an expectation of profits arising (3) from a common enterprise (4) which depends solely on the efforts of a promoter or third party. Clearly, under this standard, any crowd sourcing arrangement in which people are asked to contribute money in exchange for potential profits based on the work of others would be considered a security. As such, the applicable investment contract would have to be registered with a regulatory agency (such as the S.E.C.) unless it qualified for one of several rule-laden exemptions (e.g. Regulation A or Rule 506 of Regulation D of the Securities Act of 1933, or the California Limited Offering Exemption - Rule 1001 (also known as S.E.C. Rule 1001)). The penalties for a securities violation can vary greatly and depend in large part on the amount of profit obtained by the "promoter," the damage done to the investors, and whether a violation is a first time offense. However, a violation may result in both civil and criminal penalties, a return of any profit made and sometimes a lifetime ban from work in the securities industry. According to Section 5 of the Securities Act, it is illegal to sell any security unless such a sale is accompanied or preceded by a prospectus that meets the requirements of the Securities Act. You will have to check with an expert in the jurisdiction in which you reside, and in any jurisdiction in which your prospective offerees may reside, as well.

While I cannot and do not recommend or guarantee the efficacy or legality of any particular approach to any crowdfunding venture, I will state definitively that the structure of what is offered, and the way in which the marketing is conducted are two very critical components essential to getting the optimal crowdfunding advantage with the minimum likelihood of being in the position as an offeror or promoter of any type of securities.

I predict that some of the more spirited entrepreneurs and other innovative financial engineers looking into using the crowdsourcing approach will be delving into the following types of possible workarounds, although I do not express an opinion or offer advice on the viability or legality any one of them. I can, however, safely forecast, as a Futurist, that the following approaches or variations on them will be tried by requesters of crowdsourced capital. In each case, depending upon the specific nature of the structure of a transaction, there can be tax consequences (for example, where the “contributions” will be treated as taxable income to the company receiving them). Get advice from competent tax counsel prior to finalizing the details of any crowdfunding campaign:

1. ADVERTISING AND PROMOTION - Offering contributors permanent ads, promotional spots, or endorsements in exchange for contributions of funds. In these cases, any stake in the company would merely be given to the contributors as a perquisite;

2. HONORING EARLY ADOPTERS – Similar to the above approach, contributors would be honored as “early adopters” or “charter members” in special postings on the company’s website, newsletters and other applicable e-media. In these cases, any stake in the company would merely be given to the contributors as a perquisite;

3. SPECIFIC PROJECT FUNDS – In this approach, the company would create a special fundraising campaign (with a segregated account for received proceeds) with contributions for a specific purpose, such as contributions to a charity, a community development project, an educational opportunity, or something of humanitarian or civic interest. In these cases, any stake in the company would merely be given to the contributors as a perquisite. An important issue here is the judicious application of the funds collected; the bulk of funds collected must be allocated for the specific purpose set forth in the project description or campaign plan, with minimal expenses deducted for company purposes;

4. CLUB-TYPE MEMBERSHIPS – In this approach, contributors would be given certain privileges or access to resources of value (like club memberships) in exchange for their contributions. In these cases, any stake in the company would be given to these “charter members” as a perquisite;

5. A COOPERATIVE OR COLLABORATIVE CO-VENTURE – In this approach, contributors would be actively rendering services to the company, or through the company, in consideration of their contributions, and each of these contributors would have some significant element of “say” in the company’s financial and business affairs. In effect, the contributors would each and all be acting as the co-founders of the company, or could be regarded as such;

6. AN EMPLOYEE OWNERSHIP PROGRAM – In this approach, employees would be issued options (as bonuses) to purchase stakes in the company (generally at some bargain price) which they could earn and vest as a function of performance and/or seniority. These options might be considered and treated for taxation purposes as employee income, so due consideration must be exercised in how they are earned, issued, priced and exercised;

7. BARTER – In this approach, the company might issue ownership stakes in lieu of cash payments to creditors, vendors and suppliers. Once again, seek professional advice on the tax consequences, if any, to both the company and to the recipients in this type of trade so as not to be unpleasantly surprised.

There will certainly be pioneers, who, at great risk to themselves (and others) will just go out and directly or indirectly sell stakes to large numbers of small-ticket investors via the Internet and social media. While this approach is certainly straightforward, with honest and honorable intentions, a significant volume of successes, especially involving larger amounts raised, will invite regulatory oversight and numerous legal “test cases” and arguments as to the legality of this type of fundraising. It may well force some changes in securities regulations and laws – but these types of changes generally take time and involve a number of legal and regulatory actions.

Expect to hear and see a great deal more about crowdfunding during the next two years as it becomes much more widely-known through increased experimentation and some newsworthy entrepreneurial successes.

TNNWC Group, LLC empowers emerging enterprises locally, worldwide and inter-globally by providing 1) informational publications and products; 2) an indispensible suite of crucial, unparalleled services for business planning, development, growth, marketing and capitalization, which are offered to all of our Members who are all 3) interactively involved within a growing, mutually-supportive collaborative, cooperative community of individuals and businesses. We are run by entrepreneurial people, and we live to serve entrepreneurial people and the business initiated through their inspiration… from the garage-based technological start-up, to the “small business” wanting to break free of its limitations and grow larger at an accelerated but sustainable pace. We Empower Emerging Enterprises™ - not with “happy talk” and “grandiose ideas”… but with real tools and expert interpersonal guidance to use each of them for their optimal effectiveness. Visit us at TNNWC Group, LLC. - Join us. We have so much to offer you. Our philosophy is simple: UNITE AND CONQUER.

I promise not to do this kind of thing to you again. It's a sad, sad thing when a grown-up posts something irrelevant or immature to such an esteemed group of intelligent, well-informed, serious, and very, very, very busy people. Can you forgive me?

TNNWC Group, LLC empowers emerging enterprises locally, worldwide and inter-globally by providing 1) informational publications and products; 2) an indispensible suite of crucial, unparalleled services for business planning, development, growth, marketing and capitalization, which are offered to all of our Members who are all 3) interactively involved within a growing, mutually-supportive collaborative, cooperative community of individuals and businesses. We are run by entrepreneurial people, and we live to serve entrepreneurial people and the business initiated through their inspiration… from the garage-based technological start-up, to the “small business” wanting to break free of its limitations and grow larger at an accelerated but sustainable pace. We Empower Emerging Enterprises™ - not with “happy talk” and “grandiose ideas”… but with real tools and expert interpersonal guidance to use each of them for their optimal effectiveness. Visit us at TNNWC Group, LLC. - Join us. We have so much to offer you. Our philosophy is simple: UNITE AND CONQUER.